The Hindu Business Line : SEBI to launch new stock lending mechanism

The Securities and Exchange Board of India (SEBI) Chairman, Mr M. Damodaran, on Saturday indicated that a new mechanism for stock lending will be introduced soon by the regulator.

Speaking at a workshop for financial journalists here he used an analogy from football ground: "We are in the penalty box, we need to take a shot". But he deliberately stopped short giving out a definite timeline.

The recent margin calls — in May and December this year — and its negative impact on the stock prices caused by additional selling pressure at a time of short-term liquidity crunch at broker and investor levels has brought the focus back on the need of a legitimate lending mechanism. After the 2001 securities scam, earlier system (ALBM) discontinued IPO grading.

Mr Damodaran further said that the SEBI board will also take a view, in March 2007, on the suggestion of its primary market advisory committee recommendation of making grading of IPOs compulsory. Admitting that this is not done in any developed markets, he said that absence of precedence would not be a deterrent for the regulator to take a serious look at the interest of the investors. Early this year, the SEBI had made such grading only optional.

e-filing by corporates

The SEBI chief further announced that an e-filing system by the listed corporates will be introduced from January 1, 2007. "All disclosures and announcements will have to be made on this new site," he added. The new site would be jointly hosted by the NSE and BSE. However, Dr T.C. Nair, whole time director of SEBI, clarified that for the companies, which might find it difficult to migrate to digital disclosures, an extension of time could be allowed till April 1, 2007. An announcement is likely to be made shortly on the issue.

SEBI Act amendment

The proposed changes in the SEBI Act to increase the power of the quasi judicial body in certain areas such as penalties/fines may not come about before "the middle of the next financial year". "The legal and legislative process is now being taken forward through its usual course," Mr Damodaran said.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
DoT norms on foreign CEOs

Japan FIIs may pump in over $10 b next year

ONGC strikes gas reserve in KG basin block

HDFC fund to invest in hospitality sector

More leeway for banks in capital market exposure

New ID roll-out for investors

SEBI to launch new stock lending mechanism